Subject: File No. S7-09-09
From: Lorinda Roth
Affiliation: FPA

June 10, 2009

We are writing regarding potential changes to the custody rule for investment advisers, third-party audits of advisers, and internal firm controls. In particular, we would like to address the agenda items related to investment adviser custody issues.

1) Requiring those with custody of client assets to undergo an annual third-party audit, on an unannounced basis, to confirm the safekeeping of those assets.

We understand this proposal to apply to advisers who custody funds with a qualified custodian and/or to qualified custodians. Currently, advisers using a qualified custodian are not subject to the surprise audit.

We do not think that expanding the surprise audit to cover advisers who do not actually hold custody would materially enhance investor protection. The qualified custodian is in possession of the clients fund and sends statements directly to investors. An audit of the adviser would not directly verify information regarding the funds.

We recognize that compliance costs are a necessary price to pay as a means of protecting investors. However, the cost of an annual audit for advisers can be significant and is of particular concern for smaller advisers of our size who are less able to absorb those costs. We are concerned that the proposal would add a regulatory burden and expense without providing any additional protection or oversight on behalf of the investor.

2) Mandating that certain investment advisers have third-party compliance audits to ensure their compliance with the law.

We feel early detection of theft or misallocation of funds will best be uncovered through audits of accounts, not through audits of compliance programs. There is certainly a benefit to evaluating an investment advisers compliance program, but SEC staff is best suited to carrying out that function. Annual or periodic third party audits of compliance programs seems to be an unnecessary cost, with little or no enhancement of investor protection to justify the expense and business disruption..

3) Requiring a senior officer from each firm to attest to the sufficiency of the controls they have in place to protect client assets.

We believe management already has sufficient incentive to safeguard client assets. No firm wants to have its clients assets misallocated. The exception is when management itself intends to defraud clients. The recent highly publicized Ponzi schemes were perpetrated by the same senior management that would be expected attest to the sufficiency of controls. Periodic, quality audits, whether by the SEC or independent third parties, is a much surer way to safeguard client assets. We do not think that this requirement would provide any meaningful protection for an investor.

We would like to note that our annual compliance cost is 3% of our gross revenue. It is our third largest expense following compensation and rent. As such it is consumes a disproportionate amount of our revenue.

We thank you for the opportunity to comment on the proposed regulation and hope that you find our input valuable.

Lorinda Roth
Compliance Officer
Syverson Strege Company
4400 Westown Parkway, Ste. 405
West Des Moines, IA 50266